4.2. Recognition and Enforcement of Foreign Judgments
4.2.1. The Brussels/Lugano System
The main acts on recognition and enforcement of foreign judgments in Europe are the 2000 Brussels Regulation,132 the 1988 Lugano Convention133 and the 1968 Brussels Convention.134 These acts regulate both jurisdiction (choice of forum) and mutual recognition and enforcement of judgments.135 They provide a system for free circulation of judgments in civil and commercial matters within EU Member States plus Iceland, Norway and Switzerland. The 2000 Brussels Regulation is a revised version of the 1968 Brussels Convention brought into EU legislation.136 The 1988 Lugano Convention is a parallel convention to the 1968 Brussels Convention and it contains identical rules on jurisdiction, recognition and enforcement.137 Denmark is due to a legal reservation not part of the 2000 Brussels Regulation.138 The 1968 Brussels Convention and the 1988 Lugano Convention
132 Council regulation No 44/2001 (22 December 2000) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 697ff.
133 The EC and EFTA Lugano Convention on Jurisdiction and the Enforcement of judgments Civil and Commercial Matters from 16 September 1988.
134 EC Convention on Jurisdiction and Enforcement of judgments in Civil and Commercial Matters (27 September 1968). See in general Hertz, Ketilbjørn, Jurisdiction in Contract and Tort under the Brussels Convention, DJØF Publishing, Copenhagen, 1998, p. 45ff.
135 See also proposal for a Council Regulation creating a European enforcement order for uncontested claims, COM(2002)159 (27 August 2002).
136 Article 68 of the 2000 Brussels Regulation provides that the Regulation shall, as between the Member States, supersede the Brussels Convention, and in so far as the regulation replaces the provisions of the 1968 Brussels Convention between Member States, any reference to that convention shall be understood as a reference to the Regulation.
137 See for example Bogdan, Michael, The "Common Market" for judgments: The extension of the EEC Jurisdiction and Enforcement Treaty to Non-Member Countries, Saint Louis University Public Law Review, 1990, Vol. 9, p. 113.
138 See recitals 21 and 22 of the 2000 Brussels Regulation. See also Recommendation for a Council Decision authorising the Commission to open negotiations for the conclusion of two agreements between the European Community and the Kingdom of Denmark, extending to Denmark the provisions of Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, and the provisions of Regulation (EC) No 1348/2000 concerning the service in the Member States of judicial and extra-judicial documents in civil or commercial matters, 2504th Council meeting Justice and Home Affairs (8 May 2003), pt. A 6.
still apply.
The European free circulation of judgments is only applicable to judgments in civil or commercial matters entered by courts in one of the above-mentioned states.
The free circulation of judgments is combined with a harmonisation of jurisdiction rules applicable when suing a person domiciled in another state, which is part of the Brussels/Lugano System. The acts, which constitute the Brussels/Lugano System, specify a number of rules of national jurisdiction ('exorbitant jurisdiction') which may not be applied against a defendant in another state within the Brussels/Lugano System.139 A plaintiff, who is not domiciled in a contracting state, may also choose to sue the defendant in a contracting state in accordance with the jurisdiction rules set out in the Brussels/Lugano System.140 If the defendant is not domiciled in one of these states, the jurisdiction is to be determined in accordance with the national procedural rules of the forum state.
A judgment given in one of the above-mentioned states must be recognised in another state within the Brussels/Lugano System without any special procedure being required and the judgment is to be enforced in another state within the Brussels/Lugano System when, on the application of any interested party it has been declared enforceable there. A declaration of enforceability is to be granted on completion of certain formalities. Recognition and hence enforcement may be refused on certain procedural grounds or if enforcement is manifestly contrary to the public policy of the recognising state.141 These issues are dealt with below.142 This thesis does not deal with questions concerning litis pendens because it concerns competing competence in the same dispute. It is assumed that the Business is only being sued by one party in one court.
The European Court of Justice has been granted jurisdiction to interpret the 1968 Brussels Convention.143 The parties to the 1988 Lugano Convention have agreed to pursue a uniform interpretation of the provisions which are found in both conventions.144 The principles laid down in judgments relating to the 1968 Brussels Convention will to a far extent be applicable also to the 2000 Brussels Regulation.145 So far, the European Court of Justice has not ruled on a case
139 See the annex of the 2000 Brussels regulation as referred to in article 3(2) and Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 26ff.
140 Case 412/98 (13 July 2000) Josi Reinsurance Company SA v. Universal General Insurance Company, paragraph 61.
141 See article 34 and 35 of the 2000 Brussels Regulation.
142 See in general on similarities between mutual recognition in civil and criminal matters Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5.
143 See Protocol on the interpretation by the Court of Justice of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (3 June 1971).
144 See protocol Protocol 2, on the uniform interpretation of the Convention.
145 See recital 19 of the 2000 Brussels Regulation which provides that 'continuity between the Brussels Convention and this Regulation should be ensured, and transitional provisions should be laid down to that end. The same need for continuity applies as regards the interpretation of the Brussels Convention by
concerning the 2000 Brussels Regulation. To both the 1968 Brussels Convention and to the 1988 Lugano Convention, interpretive reports have been drawn up, including instance the Jenard Report and Schlosser Report (1968 Brussels Convention)146 and Jenard-Möller Report (1988 Lugano Convention).147 In the examination of the Brussels/Lugano System, focus will be on preparatory works and case law concerning in particular the 1968 Brussels Convention. Unless otherwise stated, that case law is also applicable to the other acts constituting the Brussels/Lugano System.
The European Court of Justice has established that, in the absence of any reason for interpreting the two provisions in question differently, consistency requires that article 5(3) of the 1968 Brussels Convention to be given a scope identical to that of the equivalent provision of the 2000 Brussels Regulation which is all the more necessary given that that regulation is intended to replace the 1968 Brussels Convention in relations between Member States with the exception of the Kingdom of Denmark.148 This shows that the European Court of Justice is likely to find inspiration in the 2000 Brussels Regulation when interpreting the 1968 Brussels Convention. This principle may apply generally and in particular have consequences in connection with the articles corresponding to those which were amended in the 2000 Brussels Regulation to ensure that the convention also applies to electronic commerce.149 Such an approach may be problematic in the light of the legal certainty which the 1968 Brussels Convention is supposed to promote. It is therefore not evident that the European Court of Justice will depart from principles already established in case law when the actual wording of the article in question does not leave room for an identical interpretation.
The purpose of the 2000 Brussels Regulation is to promote the free movement of judgments.150 The European Court of Justice has established that the essential aim of the 1968 Brussels Convention is to strengthen the legal protection of persons established in the European Community. For that purpose, the convention provides a collection of rules which are designed inter alia to avoid the occurrence, in civil and commercial matters, of concurrent litigation in two or more contracting states and which, in the interests of legal certainty and for the benefit of the parties, confer jurisdiction upon the national court territorially best qualified to
the Court of Justice of the European Communities and the 1971 Protocol should remain applicable also to cases already pending when this Regulation enters into force'.
146 Convention of 27 September 1968 on jurisdiction and enforcement of judgments in civil and commercial matters - Brussels Convention, 72/454 (27 September 1968), L 304 1978. - Jenard Report on Convention and Protocol, C 59 1979, Schlosser Report on Convention and Protocol, C 1979.
147 Convention of 16th September 1988 on jurisdiction and the enforcement of judgments in civil and commercial matters. Lugano Convention, 88/592 (16 September 1988), L 319 1988 - Jenard-Möller Report on the Convention, Protocols and Declarations, C 189 1990.
148 Verein für Konsumenteninformation v. Karl Heinz Henkel, Case 167/00 (1 October 2002), paragraph 49.
149 See Nielsen, Ruth, E-handelsret, 2. reviderede udgave, DJØF 2004, p. 357f.
150 Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 698.
determine a dispute.151
4.2.1.1. Civil and Commercial Matters
The Brussels/Lugano System concerns 'civil and commercial matters', and does not extent, in particular, to revenue, customs or administrative matters ('public matters').152 Civil and commercial matters are classified according to their nature and not to the nature of the actual court or tribunal, and include for example civil proceedings before a criminal court or an administrative tribunal.153 In most cases it will be clear whether a specific matter is of civil or public nature or which parts of a case is a civil or commercial matter. Due to the effectiveness in cross-border law enforcement under the Brussels/Lugano System, it is relevant to examine the borders of the scope of application and thus the distinction between private and public law enforcement as applied in this thesis.
The working party in connection to the 1968 Brussels Convention found it to be obvious that criminal proceedings and criminal judgments of all kinds were excluded from the scope of the convention, including other proceedings imposing sanctions for breaches of orders or prohibitions intended to safeguard the public interest. Possible difficulties was recognised in connection to classifying private penalties known to some legal systems. It was emphasised that 'since in many legal systems criminal proceedings may be brought by a private plaintiff, a distinction cannot be made by reference to the party which instituted the proceedings. The decisive factor is whether the penalty is for the benefit of the private plaintiff or some other private individual'.154
'Civil and commercial matters' is an independent concept which is interpreted by reference, firstly, to the objectives and scheme of the convention and, secondly, to the general principles which stem from the corpus of the national legal systems.
Certain judgments given in actions between a public authority and a person governed by private law may fall within the area of application of the convention, but not in cases where the public authority acts in the exercise of its powers.155 The key criterion is the nature of the legal relationships between the parties to the action or of the subject matter of the action.156 In a case concerning an action brought by an agent responsible for administering public waterways against a person having liability in law in order to recover the costs incurred in the removal
151 Effer SpA v. Hans-Joachim Kantner, Case 38/81 (4 March 1982), paragraph 6.
152 Article 1 of the 2000 Brussels Regulation and the 1968 Brussels Convention.
153 Jenard Report on Convention and Protocol, C59/1979, p. 9. See also Volker Sonntag v. Hans Waidmann, Elisabeth Waidmann and Stefan Waidmann. Case 172/91 (21 April 1993), paragraphs 16 and 19 with reference to article 5(4) of the 1968 Brussels Convention.
154 See Schlosser Report, paragraph 29
155 LTU Lufttransportunternehmen GmbH & Co. KG v. Eurocontrol, Case 29/76 (14 October 1976), paragraphs 3 to 4.
156 Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 32f with references.
of a wreck, the European Court of Justice established that the (private) agent was exercising public authority. The court emphasised that the fact that the agent acted pursuant to a debt which arose from an act of public authority was sufficient for its action, whatever the nature of the proceedings afforded by national law for that purpose, to be treated as being outside the ambit of the 1968 Brussels convention.157
It was established by the European Court of Justice that a civil servant is not always exercising public powers even though he acts on behalf of a state. This is the case when the conduct does not entail the exercise of any powers going beyond those existing under the rules applicable to relations between private individuals.
The court has emphasised that even if the activity in question (supervising pupils) was characterised in the state of origin as an exercise of public powers, that would not affect the characterisation of the dispute as being covered by the term 'civil matters' within the meaning of the 1968 Brussels Convention.158 Certain types of dispute are thus excluded from the scope of the 1968 Brussels Convention, by reason either of the legal relationships between the parties to the action or of the subject matter of the action.159
The Karl Heinz Henkel case160 concerned an action seeking injunction against a German business to prevent it from using certain terms in contracts concluded with Austrian clients. The action was brought before an Austrian court by an Austrian consumer association. The UK government argued that the consumer protection organisation must be regarded as a public authority and its right to obtain an injunction to prevent the use of unfair terms in contracts constitutes a public law power. The court established, however, that not only was the consumer protection organisation in question a private body, but in addition, the subject matter of the main proceedings was not an exercise of public powers, since the proceedings did not in any way concern the exercise of powers derogating from the rules of law applicable to relations between private individuals. On the contrary, the action pending before the national court concerned the prohibition on traders using unfair terms in their contracts with consumers and thus sought to make relationships governed by private law subject to review by the courts.161 Hence, the court concluded that an action of that kind was a civil matter within the meaning of the 1968 Brussels Convention.
157 Netherlands State v. Reinhold Rüffer. Case 814/79 (16 December 1980), paragraphs 15-16.
158 Volker Sonntag v. Hans Waidmann, Elisabeth Waidmann and Stefan Waidmann. Case 172/91 (21 April 1993), paragraphs 21, 22, 25 and 26.
159 Verein für Konsumenteninformation vs. Karl Heinz Henkel, Case 167/00 (1 October 2002), paragraph 29.
160 Verein für Konsumenteninformation vs. Karl Heinz Henkel, Case 167/00 (1 October 2002).
161 Verein für Konsumenteninformation vs. Karl Heinz Henkel, Case 167/00 (1 October 2002), paragraphs 25 and 30. See also below under the tort forum.
It should be noted that article 7 of the 1993 Directive on Unfair Contract Terms162 provides that Member States are to ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers. The means is to include provisions whereby persons or organisations, having a legitimate interest under national law in protecting consumers, may take action according to the national law concerned before the courts or before competent administrative bodies for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms.
4.2.1.2. Defendants Domicile and Special Jurisdiction
The starting point in private law enforcement is that the plaintiff must have the inconvenience of suing the defendant at the defendants domicile,163 which is reflected in the traditionally accepted maxim 'actor sequitur forum rei'.164 That is also the main rule within the Brussels/Lugano System.165 This situation, where the Business is sued in its home court, is dealt with above under private international law, since it in those situations is assumed that the Business is being sued in the state where the Business is domiciled. This part of the thesis deals with the situation where the Business is being sued in a foreign court. The rules of of jurisdiction in matters relating to branches, contracts, tort and civil claims under criminal proceedings are dealt with below.
In order to apply the special jurisdiction there must be a close connecting factor between the dispute and the court with jurisdiction to resolve it.166 The European Court of Justice has established that the special jurisdiction must be restrictively interpreted and cannot give rise to an interpretation going beyond the cases expressly envisaged by the Convention.167 The special jurisdictions are based on a particular close connecting factor between the dispute and the court in certain clearly defined situations which is in accordance with the objective of the convention, i.e. to avoid a wide and multifarious interpretation of the exception to the general rule contained in article 2 (actor sequitur forum rei).168
The plaintiff may normally choose to use either the special jurisdiction, provided the requirements are satisfied, or to sue at the defendant domicile. The analysis below includes also specific provisions on jurisdiction over consumer
162 Directive 93/13 (5 April 1993) on unfair terms in consumer contracts.
163 See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 19ff.
164 Which provides that the defendant may be sued in the courts of the state of his domicile (defendant's home court), Jenard Report on Convention and Protocol, C59/1979, p. 19.
165 It is provided in article 60 of the 2000 Brussels Regulation that a company, a legal person or association is domiciled at the place where it has its a) statutory seat, or b) central administration, or c) principal place of business.
166 Jenard Report on Convention and Protocol, C59/1979, p. 22.
167 See for example Freistaat Bayern v. Jan Blijdenstein, case 433/01 (15 January 2004), paragraph 25 with references.
168 Somafer SA v. Saar-Ferngas AG, Case 33/78 (22 November 1978), paragraph 7.
contracts which may not, as a starting point, be departed by agreement.
4.2.1.3. Branch, Agency or Other Establishment
Article 5(5) of the acts constituting the Brussels/Lugano System provides for special jurisdiction in the courts for the place in which the branch, agency or other establishment is situated, for disputes arising out of the operations of that branch, agency or other establishment.169 The concept of branch, agency or other establishment implies a place of business, which has the appearance of permanency, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties.170 Article 5(5) applies also to cases in which a legal person, established in a contracting state, does not operate any dependent branch, agency or other establishment in another contracting state, but nevertheless pursues its activities there by means of an independent undertaking which has the same name and identical management which negotiates and conducts business in its name and which it uses as an extension of itself.171
It has been argued that a website under certain conditions can be considered a branch as defined by article 5(5).172 In particular if the site is inter-active, programmed to 'negotiate' with customers. It is mentioned that the use of a particular country-code ('top level domain'),173 may create a legitimate expectation on the side of the customer that he is dealing with an establishment situated in a particular country.174
The European Court of Justice has in connection to article 5(5) of the 1968 Brussels Convention established that the concept of article 5(5) must be interpreted independently and that the option granted to the plaintiff, by definition, is a question of factors concerning two entities established in different contracting states.175 From the two cases mentioned above,176 it seems clear that article 5(5) is meant for situations where the defendant has a physical presence.177 This approach
169 See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 160ff.
170 Somafer SA v. Saar-Ferngas AG. Case 33/78 (22 November 1978), paragraph 12. See also Jenard-Muller Report, p. 100.
171 SAR Schotte GmbH v. Parfums Rothschild SARL, case 218/86 (9 December 1987), paragraph 17.
172 Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75 at p. 78f. with references.
173 See 5.2.1.1.
174 Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75, p79.
175 Somafer SA v. Saar-Ferngas AG, Case 33/78 (22 November 1978), paragraph 7 and 8.
176 Somafer SA v. Saar-Ferngas AG, Case 33/78 (22 November 1978) and SAR Schotte GmbH v. Parfums Rothschild SARL, Case 218/86 (9 December 1987).
177 Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second
should be considered in the light of the principle that the special jurisdiction must be restrictively interpreted and cannot give rise to an interpretation going beyond the cases expressly envisaged by the convention.
One aim of the 2000 Brussels Regulation was to update the rules of the 1968 Brussels Convention to suit electronic commerce. There were no changes or comments on the branch forum, and it could be argued that if the drafters envisaged the branch forum to include a website, such consideration would appear in the proposal.178
It seems difficult, especially in the light of the strict construction of the special jurisdiction, to consider a website to be independently established in any state.179 This conclusion seems to correspond with the definition of established service provider in article 2(c) of the 2000 E-Commerce Directive which provides that the presence and use of the technical means and technologies required to provide the service do not, in themselves, constitute an establishment of the provider.180
The concern regarding an 'implied establishment' seems reasonable, in particular in situations where the Business gives the User a reasonable expectations of dealing with a business established in the state of the User. It seems, however, to be stretching the provision beyond its scope, to use the branch forum in that situation. For good measure, it should be mentioned that the 2000 E-Commerce Directive in article 5, introduces a requirement under which providers of information society services must render easily, directly and permanently accessible the name and geographic address at which the service provider is established to the recipients of the service and competent authorities.181
4.2.1.4. Matters Relating to a Contract (Performance Forum)
A person may, in matters relating to a contract, be sued in the courts for the place of performance of the obligation in question.182 The obligation to be taken into
edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 169.
178 See Proposal for a regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 (14 July 1999). See also Gillies, Lorna, A Review of the New Jurisdiction Rules for Electronic Consumer Contracts Within the European Union, JILT 2001(1), under 2.2.1, where the author wonder why the drafters of the 2000 Brussels Regulation did not take the opportunity to clarify whether a server could constitute a branch within this article.
179 See for a similar opinion, Nielsen, Ruth, E-handelsret, 2. reviderede udgave, DJØF 2004, p. 360f. It should for good measure be mentioned that the author recognise that his opinion is 'highly controversial'.
See Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75, p. 79.
180 See to this end Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 131.
181 See in general Howells, Geraint and Nordhausen Annette, Information Obligations in EC E-Commerce Law, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 49.
182 1968 Brussels Convention article 5(1), 1998 Lugano Convention article 5(1) and 2000 Brussels